Markets Overview
- ASX SPI 200 futures up 0.3% to 8,713.00
- S&P 500 down 0.1% to 6,911.62
- Dow Average up 0.4% to 49,216.37
- Aussie down 0.4% to 0.6692 per US$
- US 10-year yield rose 3.4bps to 4.1829%
- Australia 3-year bond yield fell 8.6 bps to 4.07%
- Australia 10-year bond yield fell 9.1 bps to 4.67%
- Gold spot down 0.1% to $4,449.97
- Brent futures up 4.1% to $62.44/bbl
Economic Events
Asian equities look set to open higher after a mixed session on Wall Street and ahead of US payroll data due Friday and a possible Supreme Court ruling on President Donald Trump’s tariffs. Oil jumped.
Equity index futures for Japan, Hong Kong and Australia all climbed in early Asian trading. A flat day for the S&P 500 Thursday masked selling in tech behemoths Nvidia Corp. and Apple Inc. Defense contracts climbed on President Donald Trump’s plan to ramp up military spending, while small caps also rallied.
The Russell 2000 index of smaller US companies has beaten the Nasdaq 100 by around 4 percentage points in the first five sessions of 2026, the second-best outperformance to start a year on record.
The moves were a sign investors are rotating out of richly valued tech giants into smaller companies, tapping the breaks on the AI-driven tech gains of the past few years.
“It’s unclear at this point whether this is just a breather or a full rotation,” said Paul Ticu at Calamos Investments. “Markets are still trying to figure out a direction.”
A rally in government debt paused. The yield on 10-year Treasuries rose two basis points to 4.18% after announced layoffs at US companies dropped to a 17-month low in December, potentially easing fears of a sharper economic slowdown. Weekly jobless claims climbed less than economists forecast.
The dollar was slightly stronger Thursday, while oil moved higher as investors monitored developments in Venezuela and Iran. Silver retreated further from its record struck earlier in the week, while gold inched higher.
Investors will be on guard for US jobs data set to land later. Economists surveyed by Bloomberg anticipate 70,000 new positions were added to the US economy in December, slightly higher than the prior month, while the unemployment rate is expected to fall to 4.5%.
Jobs data will help illuminate the path ahead for US interest rates. Money markets are pricing in at least two quarter-point cuts from the Federal Reserve in 2026.
The Supreme Court is also poised to decide the fate of most of Trump’s tariffs as soon as Friday. Hundreds of companies are already lined up hoping to recoup their share of the billions of dollars in duties paid so far.
In Asia, data set for release includes inflation and producer prices for China, consumer confidence in Indonesia, and industrial production in Malaysia. The yen was little changed around 157 per dollar in early Asian trade.
Earnings growth for US small-cap firms is poised to outpace large-caps after years of underwhelming fundamentals, according to Francis Gannon, co-chief investment officer at Royce Investment Partners.
“Small caps have the relative valuation story and they have the earnings story,” he said. “It’ll be the beginning of a long cycle for small caps because they’ve been so out of favor since a long period of time.”
Defense names also outshone the broader market with Lockheed Martin Corp. and Kratos Defense & Security Solutions Inc. rising after the US president signaled plans to raise military spending to $1.5 trillion in 2027.
